Kurt Heidemann:
Hey everyone. Before we get to this episode, I just wanted to say that we recorded this back on July 10th before the NC and EF&A committees traveled out to Seattle for negotiations. We're releasing it on July 17th, but on the 15th of July, ALPA and United reached an agreement in principle. So there are a couple things that might be a little out of date with what's said on this episode, but overall it's a really good representation of where we're going to be with the contract comparison. So with that housekeeping out of the way, here's our episode.
Amy Robinson:
Today's SWAPA number is 6. That's the number of agreements that have been ratified with two still pending at other carriers over the last nine months. With American and FedEx agreements out for ratification, that leaves just us as the only major airline still far away from a deal.
Kurt Heidemann:
So today on the show we're going to talk with EF&A Chair Eric Schnitzler, member Greg Auld and SRC Committee member Dan O'Connor about what's been happening with other carriers contracts and SWAPA's upcoming contract comparison scheduled to be released in the next couple of weeks.
Amy Robinson:
I'm Amy Robinson.
Kurt Heidemann:
And I'm Kurt Heidemann. And here's our interview with Eric, Greg, and Dan.
Amy Robinson:
So Eric, first off, why are we updating our contract comparison now?
Erich Schnitzler:
Well, we figured that it's time because we have several airlines that have already come to an agreement or have tenant agreements out there and we think it's important to get this information out to our pilots since we are obviously in the middle of contract negotiations and it's important that we keep them informed.
Kurt Heidemann:
And now the Delta deal changed the market. Would you say that it's still rising or do you think we've hit a high point?
Erich Schnitzler:
I think it potentially could still be rising. We haven't seen yet what United has, but United is reportedly very close. Less than 10 items to close their contract to a potential tentative agreement. So we do think there is possibility for the market to continue to rise.
Amy Robinson:
Which airlines are still waiting for a deal?
Erich Schnitzler:
Well, obviously us, and United and Allegiant is also out there as well. Recently we had American is in the middle of a vote. Their board just approved their tenant agreement to be sent to the membership. And then of course earlier this year we had Delta settle and then very early this year at the turn of the year and last fall we had Alaska and Hawaiian as well as Spirit and JetBlue, FedEx as well there, if not already started to vote, preparing to send their agreement to the membership.
Amy Robinson:
If these other airlines close a deal, will we update the contract comparison to show those changes?
Erich Schnitzler:
Absolutely. Right now our contract comparison is just about finished. We're working on the benefits section, but everything is updated except for United right now and we will make everything final once we see if American's deal passes and FedEx deals passes. But everything else is updated and we will continue it. It's a living document so we'll continue to update that as long as changes come in from the other carriers.
Kurt Heidemann:
When you describe those airlines, you listed a number of airlines, but do we compare ourselves to all those? Do we compare ourselves to FedEx, to Allegiant, to all the other carriers?
Erich Schnitzler:
We compare ourselves to the big four. The other airlines are good for informational purposes, but we stick with comparing ourselves to the other three carriers that comprise the big four and we will note UPS and FedEx were appropriate.
Greg Auld:
And I think that's sort of comparison because that's exactly how the company's management compares itself and its proxy statements, it compares themselves to the large airlines and so it's only appropriate that we do that ourselves.
Amy Robinson:
Talk a little bit about compensation per diem. The new pay provisions in the various contracts.
Erich Schnitzler:
With Delta and American, obviously they got a fairly decent sized raise, a snap up and then continuing raises on through either 2026 or 2027.
Kurt Heidemann:
First of all, we call them snap ups. We're talking about the pay rates on the date of ratification. That's what we're talking about when we say a snap up, right?
Erich Schnitzler:
Correct. For example, Delta's rates, their snap up becomes effective January 1st of this year and Americans, if it's ratified would be May this year.
Kurt Heidemann:
And so how does that differ from when they calculate a ratification bonus as retro pay? How do they get that number?
Greg Auld:
Well the way they've been calculating those numbers in the past is they essentially set what you might consider like a phantom pay rate for a previous year. So for example, Delta said they paid 4% for the wages of earned in 2020 and then 4% in 2021 and then 14% for the wages earned in 2022. So you add those together and then you go back and look at the flying done during those periods at those elevated rates and then you of course get a check for the difference.
Kurt Heidemann:
So the snap up and the retro or the ratification bonus, they're related but they're not the same thing
Greg Auld:
Exactly. So they don't go back and publish a 2020, 2021 and 2022 pay table per se. But they do calculate the bonus based on that. Instead, what they do is they roll up just what Eric said, the snap up rate or the increase at date of signing and create the new pay table.
Amy Robinson:
So, what percentage raises would Southwest need to match, say American or Delta?
Greg Auld:
Well to make that distinction, first you have to talk about how do we convert our TFP pay values to the other carrier's block hour values. The subject of the TFP to block hour conversion would really be the subject of an entire other podcast. And math is hard to do on the radio, so let's just keep it a little bit more simple. If we look at the conversion of our TFP values to say Americans TA values as they exist right now using the agreed upon or should say the previous agreed upon rate of 1.149 TFP per block hour, that would mean we'd need a 19.4% raise at data signing to reach American's Group 2 rates, which encompasses their 737s. Delta, if we just use their 700 and 800 rates, we'd need 18.7%. If we used their 900 rates, they also, we would need a 19.4% raise to match Delta.
Kurt Heidemann:
We're recording this the week after Adam Carlisle put out kind of the table positions for the company, VP of Labor Relations and one of the things he mentioned was the company's offering narrow body rates. How do we compare the, you said Group 2 and that's the 737, what about the 75? What about the 321 Neo? How do they justify narrow body rates?
Greg Auld:
Well if you look at the other carriers, let's look at American and Delta because those are the ones we know and have published scales. Americans are easier to look at because they lump their narrow bodies like A320, 321 and 737 into their Group 2. And that's typically how we've compared ourselves. They have a Group 3 which is a step above, which includes the 757 and those rates run about three and a half, 3.8% more than their Group 2 rates. So those rates, while those are narrow body airplanes, those are longer range narrow body airplanes. But those do represent a target for us to look for as we try to match what Adam's narrow body rates are. We would look to the other carriers' narrow body as well. Delta does something similar. They have a 737, 700, 800 rate. They have a very small step up into their 737-900 and they've just added an A321N rate, which is equal to their 757 and their smaller 767 rates.
Erich Schnitzler:
One point that we found interesting is Delta has a hundred of the MAX 10 aircraft on order. However, they do not have MAX 10 rates. And to our knowledge, when they do acquire these aircraft, that would trigger reopener and they would negotiate new pay rates for that MAX 10. American does have MAX 8 and MAX 9 rates. We found that to be pretty interesting when we were going through the comparison here.
Amy Robinson:
Okay, let's talk a little bit about per diem. Is there a difference between American and Delta and some of the others?
Erich Schnitzler:
Yes, they increased their per diem. Just to refresh, ours is 2.35 domestic and 2.85 international and American and Deltas mirror each other at 2.85 for domestic and 3.35 for international. What's interesting is that these rates are indexed to the government meals and incidental expenses tables. So they will increase as the government rates go up. Delta for example, is indexed at 90% of the M&IE rate. Americans can never be lower than the rates they have now. So that's important because that attempts to keep pace with inflation as we all know, it's very expensive on overnights, meals, beverages, that kind of thing. So it's important that that keeps up with the rising costs of purchasing food on the road.
Kurt Heidemann:
Dan, you've been real quiet so far. So let me ask you, how about holiday pay? How does that compare?
Dan O'Connor:
Yeah, Kurt, so as you know we have currently three paid holidays here at Southwest. Just for comparison, Delta's agreement has seven and Americans has nine. So obviously we're proposing more. In fact, we have 10 proposed holidays in the current Contract 2020 proposal. But not just the number of holidays are changing, we're also proposing how we are compensated for those holidays.
Kurt Heidemann:
How so?
Dan O'Connor:
We're trying to draw more in-line with the industry standard instead of a premium applied to legs. It's very much simplified. Just one ADG of pay is added if you are pairing or duty of any kind really reserve training. If it touches a holiday, then you're paid for that holiday and again it'd be an ADG added as an override. So for us, 6.5 TFP will be added.
Kurt Heidemann:
And that's in-line with the industry ADG override?
Dan O'Connor:
Yes.
Amy Robinson:
What are some other changes to expenses, uniforms, things like that?
Erich Schnitzler:
Sure. We have a section in there for just what you mentioned and two of the bigger changes coming out of from American and Delta was the change in reimbursement for the FA Flight physical. Now both airlines, they matched each other. Again, both airlines offer $278 for a physical without an EKG or $457 with the EKG. And for parking, both American and Delta have parking of course for free at their bases and now Delta added $400 for a reimbursement for the year if you choose not to park at one of their bases. So that is a change. Uniforms, nearly every airline pays for uniforms now a full set and otherwise for other expenses, not a whole lot has changed. A couple of different reimbursements for moving both American and Delta get a one-time allowance of $6,000 paid to the pilot during a move which is up from 2000 from previous.
Kurt Heidemann:
What are the changes in retirement at OALs in comparison to ours?
Erich Schnitzler:
Well both American and Delta received increases to their non-elective contribution 17% and 18%. And the 17% starts in 2024 and then 18% comes in the year 2026. And speaking of a bigger retirement change that is over at FedEx where they are going to be transitioning to from their pension, their A fund to a market-based cash balance plan. Now American and Delta also have market-based cash balance plans as part of their new retirement, but that will involve only spill cash that is money above the 415 or the 401(a)(17) limit. Whereas FedEx would like to transition away from their pension and move people into the market-based cash balance plan and that will end up being an 11% contribution to their market-based cash balance plan as well as continuing with their 9% non-elective contribution for a total of 20%. It's a pretty big change and we think it's an incentive to maybe get people to retire, take a little early retirement there at FedEx. They also raised some of their pension limits to increase their A fund benefit, so we've been watching that pretty closely as well.
Amy Robinson:
Are there any changes in terms of vacation with any of the other carriers?
Erich Schnitzler:
Sure. Some of the vacation, the accruals have been raised like Delta is up to now four hours per day and then it increases in the outer years to a little bit higher than that four 15 and then four hours and 30 minutes of vacation credit. They also in changed some of their accrual, but for the most part, most of the carriers have stayed with what they have. Alaska did increase theirs to three hours and 45 minutes of pay per day for a vacation value. But pretty much everyone else has stayed fairly consistent.
Kurt Heidemann:
Now a big hot topic in our negotiations right now obviously is sick leave and accrual and banks. How do we compare to the current industry or what's being negotiated right now?
Erich Schnitzler:
Well, with our sick leave, that is something that did not change much at the other carriers and they will still stay. Delta has up to 270 hours a year depending on how long you've been with the company and American will still accrue five hours per month or 60 hours for the year. A slight difference, Alaska will get a payout at the end of their career, but it's graduated in scales of 25%, 50%, then finally 100% depending on how much you retire with. And American has a provision in there to where you can accumulate and then cash out at 66% of the full value of the vacation. But otherwise not a whole lot of changes there. And just looking at this, everybody else is pretty standard from before, but those are the only major changes.
Dan O'Connor:
Just like to point out too, yeah, our accrual is a little higher than some of the other carriers, but I'd like to point out our pairings are on average more dense than other carriers also. So when a pilot's required to call in sick for a three or four day pairing, they need that additional TFP to be covered because of those denser pairings.
Greg Auld:
Dan's right, when our pairings are denser, they're significantly denser. Just looking at some data we looked at last year, I mean we're flying two, two and a half, two and three-quarter legs a day per average. And the other Delta, United are all under two legs a day. So absolutely right that the coverage we need for our sick bank is much higher on a daily basis than the other carriers get.
Amy Robinson:
Let's talk about medical benefits. Were there any changes to those?
Erich Schnitzler:
We're still working on that section. One thing that's important is like the Delta Pilots medical plan is codified, meaning it's contractual, which we think is very important and is something we are working on here right now. Otherwise, there were some changes to the health retirement account, for example, at Hawaiian. But as for significant changes in the medical plan, we haven't seen any as of yet. But again, we're still compiling that information, but we should be able to have that prepared here pretty soon.
Kurt Heidemann:
We do have the regular plan and the company typically uses, I hate to talk negotiations cause this is contract comparison, but they really like to highlight the fact that the regular plan is the only plan out there with zero premiums and that is codified. But they kind of use that as a shield too to say we can't offer these other things because we have this regular plan.
Greg Auld:
They do. It is interesting just to listen to read the body language and to listen to them talk about the regular plan. It's right, it's a contractual plan with zero premium, which is a terrific benefit. There, of course, the restrictions on the regular plan, on preventive care and things like that. But the point I've been making in the room is while the regular plan, it's a contractualize and it's an attractive plan, it is still just a medical plan that happens to have zero premium. So just like other plans that offer different things and have a small or a larger premium, I'd like to not get lost in the idea that the regular plan is so special and so different that it prevents us from doing other things in the benefit package. It's a nice plan, but it happens to have a premium and that premium is $0.
Amy Robinson:
As we know at Southwest, our pilots pay for their short-term and long-term disability plans. Are there any changes or what are those changes in other carriers?
Erich Schnitzler:
Yes, as you mentioned, this is a point that's very important to our pilot group. And so in looking across the industry, American change theirs to become matching Delta at 50% of their pre-disability earnings and that is uncapped. Delta, as we know already was 50% uncapped. And interestingly too, they were able to eliminate the social security offset. We've talked about that before. And so neither Delta or American have that social security offset, so that's pretty important. And also they are fully pensionable, meaning you'll get an EC on the benefit. So that's a pretty big change. Certainly for American. We know that this is important. We're pretty certain that this is one of the higher priority items at United. Obviously it's a high priority item here for us and in looking across the rest of the industry, not much else has changed. Alaska's also 50% uncapped as well and a couple of the other carriers are in the same range. But again, in keeping with our focus on the big four, it's really, Americans changed. There was pretty big as compared to what they had before. And as I mentioned, matching Delta.
Kurt Heidemann:
So that covers a lot of the non-scheduling stuff. Let's talk some scheduling. Dan, what are some of the changes that have been achieved at OALs that are currently in our proposals?
Dan O'Connor:
All right, Kurt. Well, one of the fundamental shifts that we've seen was how pilots are paid when it comes to reassignments. We've seen this shift happen at Delta and also proposed at American, and we have a similar proposal in our language we call leg change override, which basically any leg that is different from your original pairing would pay an override value above the pairing value. Ironically, when we had a scheduling conference in Chicago in April of 2021, we were talking about reassignments. We told the other carriers what our proposal was going to be with this, with leg change override and they must have liked it because we see this adopted narrow language now.
Kurt Heidemann:
And so how do those play out at the other carriers? What's the Delta comparison for leg change override?
Dan O'Connor:
Theirs is just a little bit different, but the way theirs is going to work is any rerouted legs prior to their first break in duties that first day following a reroute are going to pay basically a 50% override and then after the first break in duty, so the subsequent days are going to pay a hundred percent override. Ours is a little more based on the footprint of the pairing, but it's very similar in that they pay over and above the pairing value.
Erich Schnitzler:
What about American?
Dan O'Connor:
The American's very similar. Their reassignments are going to pay a 50% premium for segments in that current or first duty period and then a hundred percent premium for all the segments and subsequent duty periods until they're returned to their original flying or the sequence just terminates back in base.
Erich Schnitzler:
And Dan, I came across something interesting on the Delta contract, whereas if they get back after their scheduled arrival time on the last day, they get a positive space to wherever they'd like to go and or a hotel. Had you heard that?
Dan O'Connor:
Yes. So the way that works in Delta's new contract is if the pilot is rerouted and then subsequently arrives back in base after originally schedule release time, they'll receive positive space transportation at their request. And in addition to that, if they're unable to commute home due to that reroute, they'll receive a hotel in base in addition to the positive space transportation at the request.
Amy Robinson:
So besides leg change override, which we've heard a lot about here at Southwest, what other additional pay overrides have been proposed at other airlines?
Dan O'Connor:
To answer your question, Amy, yes, other carriers have proposed and accepted some new overrides. The first would be a ground time override that they have, they call a sit pay, which they now have at Delta. And a proposed at American, which we do have a similar proposal in Contract 2020. And now Delta also has a different override called ADG carve out. So if they are running late and then release on the last day of their sequence after midnight, they're going to get additional pay. It could be two hours of pay or even an additional ADG if it goes past two in the morning.
Greg Auld:
That's amazing. So if they land after midnight, they get two hours pay. I just looked at the June schedules. We have scheduled 190 flights a day landing after midnight, and we have scheduled 62 flights landing after one o'clock. And that doesn't even talk about the ones that run late. So to see Delta get additional pay for running late like that, that's amazing.
Kurt Heidemann:
Dan, I know that a lot of our pilots have brought up the idea of an aircraft swap override and I know it's in our proposal. Is that in any other contracts right now?
Dan O'Connor:
Not that we have found, no.
Amy Robinson:
So we've heard some interest in higher DHR rig. Is there any other carriers that are doing that currently?
Dan O'Connor:
Well, Delta has now something called extended duty period pay. What that is, is any duty periods that extend past 10 hours, they're going to be paid one hour of pay for every hour of duty. And that's on a prorated minute by minute basis for each duty period.
Kurt Heidemann:
And so that's just to compensate the pilot for long days. Was that scheduled or actual or both?
Dan O'Connor:
Actually, it's both. It's actually the greater of scheduled or actual duty time. And yes, it's to compensate pilots as we know, after 10 hours, those days get pretty long, you get more difficult. So that's their way of compensating their pilots for those. We have a proposal for that. Also graduated DHR proposal.
Amy Robinson:
Let's talk about, JA, there's some rumors going around that other airlines have done away with JA completely, I don't think we did in our proposal. Is that correct?
Dan O'Connor:
That's correct. There is a misconception out there that other carriers don't JA. That's not the case. They may call it a different name, but most of them still have some form of JA definitely in the form of unscheduled overnight. We did not propose to get rid of JA. We have several proposals in Contract 2020 to mitigate the JA both in the scheduling and execution sections. So we expect less JA and when they, we are JA to be compensated better for it.
Kurt Heidemann:
I know this is a contract comparison podcast, but close out the episode for our listeners about where they can find out some more about Contract 2020 and our proposals.
Dan O'Connor:
Absolutely. Thank you, Kurt. Yeah, as you know, I can go on for hours about these proposals, but there's a couple great resources out there that our pilots can go to right now to find out more. The main one would be our Contract 2020 Blueprint for Success series. A couple places you can find that. You can go to the swapa.org website and on the schedule research committee page, right down, about halfway down is the Blueprint for Success and it's broken down by section. And then each one has multiple questions, basically issues that we are addressing in Contract 2020. Also, every Tuesday, as you know, we send out the snapshot to the pilots and there's always a link to that Contract 2020 Blueprint series there. And just to point out, we've been adding content to that weekly now for a year and a half. So there's quite a bit there.
Amy Robinson:
And Eric, what would you tell our listeners about the contract comparison? Where can they find that and when can they expect updates to it?
Erich Schnitzler:
Well, the idea is to send it out or rather, not in printed form, but probably on the website to start with, since it's still a work in progress, depending on the status of United and of course our contract. However, I would suggest that it would be available most likely by the end of this month or first part of August as soon as we can finish up the benefits portion of it. And then again, it will be a living document that will be consistently updated as the other airlines come in with any changes. So look forward on the website first and then once we have some more finalized comparisons with United getting a contract, then we would look to put it in printable form.
Kurt Heidemann:
Thank you to Eric, Greg, and Dan for taking the time to talk to us today. Knowing what other carriers have achieved with their contracts provides a baseline for knowing that our proposals are not only reasonable, but many are just industry standard.
Amy Robinson:
Please keep in mind that we do want to hear from you. If you have any feedback or ideas for podcasts that we have yet to cover, please drop us a line at [email protected].
Kurt Heidemann:
And finally, today's bonus number is 308. That's the average number of departures per year per SWAPA pilot. That's about a hundred more departures than our peers at Delta, American and United. That just illustrates that we have to compare not only contracts at OALs, but also the extra value we provide to Southwest Airlines.